No wonder Masters Home Improvement has struggled since launching in 2011, given 2011 also represented the peak in renovation activity across Australia, according to the Housing Industry Association’s (HIA) latest edition of Renovations Roundup:
“The HIA Renovations Survey provides a comprehensive update on conditions within the sector,” said HIA Senior Economist, Shane Garrett. “Repairs and maintenance are the most popular type of job, followed by kitchen and bathroom renovations.”
“A significant 24 per cent of renovation jobs fall within the value range of $12,000 to $40,000. The survey also found that 13 per cent of renovation jobs fell in the range of $200,000 to $400,000. This reflects demand for comprehensive renovation work which covers a large part of the footprint of an existing house and is an area of the renovations market that should gather momentum in coming years.”
“Total renovations activity grew for a second consecutive year in 2015, rising by 4.4 per cent,” noted Shane Garrett.
“However, the recovery remains quite fragile and there is considerable geographic variation to activity,” explained Shane Garrett. “Several markets are benefitting from the improving labour market along with stronger dwelling price growth. In other places, weak earnings growth, relatively low turnover of established houses and tighter credit conditions are holding activity back.”
The Renovations Roundup projects that renovations activity will increase by 0.7 per cent this year with growth of 1.7 per cent forecast for 2017. HIA projects that activity will grow by 2.8 per cent in 2018 followed by a 3.2 per cent increase in 2019, bringing the total volume of renovations activity to $33.02 billion.
A state-by-state round-up of renovations activity is provided below:
New South Wales
Having grown by 3.3 per cent to $8.47 billion during the 2015 calendar year, we project that the pace of growth in renovations will ease during 2016 with an increase of 2.0 per cent forecast. Growth is anticipated to reach to 2.8 per cent in 2017 with activity then projected to see steady growth out to the end of the decade. This will involve growth of 3.2 per cent during 2018 and 3.9 per cent growth in 2019. From a projected $8.64 billion in 2016, renovations activity is forecast to increase to $9.52 billion in 2019.
Victoria
Having declined by 0.5 per cent to $7.33 billion during the 2015 calendar year, we project that renovations activity will fall further during 2016 with a contraction of 2.6 per cent forecast. Growth is anticipated to return to 1.3 per cent in 2017 with activity then projected to see steady growth out to the end of the decade. This will involve growth of 1.4 per cent during 2018 and 0.9 per cent growth in 2019. From a projected $7.14 billion in 2016, renovations activity is forecast to increase to $7.40 billion in 2019.
Queensland
Having grown by some 8.8 per cent to $7.11 billion during the 2015 calendar year, we project that the pace of growth in renovations will ease during 2016 but with a still significant increase of 5.9 per cent forecast. Growth is anticipated to ease again to 3.9 per cent in 2017 with activity then projected to see steady growth out to the end of the decade. This will involve growth of 4.1 per cent during 2018 and 5.1 per cent in 2019. From a projected $7.53 billion in 2016, renovations activity is forecast to increase to $8.57 billion in 2019.
South Australia
Having declined by 0.3 per cent to $1.95 billion during the 2015 calendar year, we project that renovations growth will drop again during 2016 with a fall of 5.6 per cent forecast for the year. Growth is anticipated to return in 2017 (+1.4 per cent) with activity then projected to see modest growth out to the end of the decade. This will involve growth of 1.6 per cent during 2018 and 3.7 per cent growth in 2019. From a projected $1.84 billion in 2016, renovations activity is forecast to increase to $1.97 billion in 2019.
Western Australia
Having grown by some 10.3 per cent to $4.19 billion during the 2015 calendar year, we project that renovations activity will fall during 2016 with a decline of 2.2 per cent forecast. Another contraction of 3.8 per cent is forecast for 2017, with activity then projected to see steady growth out to the end of the decade. This will involve growth of 2.8 per cent during 2018 and 1.8 per cent growth in 2019. From a projected $4.10 billion in 2016, renovations activity is forecast to inch up to $4.13 billion in 2019.
Tasmania
Having grown by 4.0 per cent to $673 million during the 2015 calendar year, we project that the pace of growth in renovations will ease during 2016 with an increase of 2.0 per cent forecast. Growth is anticipated to reach to 2.7 per cent in 2017 with activity then projected to see modest growth out to the end of the decade. This will involve growth of 1.7 per cent during 2018 and 3.3 per cent growth in 2019. From a projected $686 million in 2016, renovations activity is forecast to increase to $741 million in 2019.
Northern Territory
Having grown by 4.5 per cent to $276 million during the 2015 calendar year, we project that renovations growth will reverse during 2016 with a decline of 4.3 per cent forecast. Another contraction of 3.0 per cent is forecast for the 2017 calendar year with activity then projected to see solid growth out to the end of the decade. This will involve growth of 5.8 per cent during 2018 and 4.7 per cent growth in 2019. From a projected $264 million in 2016, renovations activity is forecast to increase to $284 million in 2019.
Australian Capital Territory
Having grown by some 11.4 per cent to $370 million during the 2015 calendar year, we project that the pace of growth in renovations will ease during 2016 with an increase of 2.0 per cent forecast. Growth is anticipated to reach to 4.9 per cent in 2017 with activity then projected to slow out to the end of the decade. This will involve growth of 2.7 per cent during 2018 and then a marginal contraction of 0.1 per cent during 2019. From a projected $378 million in 2016, renovations activity is forecast to increase to $406 million in 2019.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
